Property development on the other side of lockdownJuly 02, 2020
Property transactions are now possible, and as developments are happening as we reach the other side of lockdown, activity is increasing on construction sites. The Prime Minister has announced a package of support - standing behind a podium with ‘Build, Build, Build’ written on it.
How we can help with property development:
Our commercial real estate team can provide support with property development contracts. For instance:
- Exclusivity Agreements: this can be used to lock down terms and set out confidentially obligations. We are used to rolling out such documents quickly to help with tricky negotiations. This can be important where deals are being done a pace to kick start matters post-lockdown, however, commercial confidentiality needs to be preserved.
- Option and Promotion Agreements: the traditional option agreement to apply for planning and then call for purchase still has many pitfalls for both landowners and developers. We are used to negotiating these and balancing the position for both parties. With increased uncertainty even into the long term it is more important than ever these contracts are robust.
- Contracts Conditional on Planning: on deals requiring conditional steps and the obligations to be performed before completion, we can draft the wording on this. We are used to spelling out what both parties will take to be a satisfactory planning and advising on the possible outcomes under different policy scenarios.
- Overage/Clawback Agreements: sometimes, land is sold at mid points in the planning process or with the intention that there will be future slices of the action if circumstances change. The risk of that in the changed world after the outbreak highlight this. We can help provide wording to future proof such agreements and advise how they are secured on the land.
What are some of the issues to spot with property development?
The important of good due diligence remains. The following are some of the issues to be alert to and which we can help with:
- Planning constraints: are there any constraints on existing or anticipated planning permissions and statutory agreements?
- Boundaries: are the physical boundaries clear and secure? Who has control over the boundary features? are there any party walls or neighbouring issues apparent?.
- Rights of Way and Easements: is the land burdened by third-party easements; and if so, which land benefits from them, and who should be approached to secure a release or variation?
- Highways: does the site abut an adopted highway at all essential points, or does it rely on private easements for access or services? Is there sufficient land to create any new access; and are the existing services of adequate capacity to serve any new development?
- Restrictive covenants: are any restrictive covenants on the title, and if so, are enforceable? These will require careful legal scrutiny, and we can generate solutions and give guidance options on the legal risk.
- Vacant possession: is there anyone on the land and will they leave? If it is agricultural land, what is the nature of any farming occupier and does this need review.
- Third party leases: are there any third party leases and if so, are they protected business leases under the Landlord and Tenant Act 1954?
- Local constraints: is there a risk of registration of land as a town or village green – the underlying legislation has become the weapon of choice for those seeking to delay development proposals;
- Statutory constraints: do you need to identify the statutory basis on which land was acquired or is held, and whether there are any additional statutory procedures to consider?
- Rights of light: does the development potentially infringe a third party's right to light, and can it be designed in such a way as to respect the right of light without loss of development value?
- Party Walls: does the development include works to party walls, and works within three metres of neighbouring structures, or six metres depending on the depth of foundations?
- Environmental and nature conservation issues: is the project likely to encounter contamination, flooding, ground stability or archaeological issues?